On February 27, 2025, Nate Horner, Finance Minister, tabled the province’s 2025 Budget, outlining a comprehensive plan to address the challenges of uncertainty in trade and security.
Upcoming payroll tax changes include:
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A new personal income tax bracket of eight per cent applies to the first $60,000 of income was introduced, effective January 1, 2025,
This tax cut is being implemented earlier than originally scheduled in Budget 2024 to provide more timely relief to Albertans. Once payroll withholdings are updated, most taxpayers will begin to see the benefits reflected in their paycheques after July 1, 2025.
Starting in 2026, the $60,000 threshold will be adjusted annually based on the Alberta escalator, ensuring the bracket remains aligned with inflation and cost-of-living changes.
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Supplemental Personal Tax Credit
To ensure individuals claiming more than $60,000 in non-refundable tax credits do not incur higher taxes due to the new eight per cent bracket, a supplemental credit equal to two per cent of the amount exceeding $60,000 will be available.
This credit applies beginning in the 2025 tax year and will be adjusted annually by the Alberta escalator starting in 2026.
The National Payroll Institute will monitor the progress and implementation of this change and will keep its members informed.